Consider an economy with the following features Consumption, C= 100 + 0.9 Y, Income tax, t=-Y 3. Investment, I= 600 – 30 i Government expenditure, G= 300 Transaction demand money for M, 0.4Y Speculative demand for money, M,=- 50 i Nominal money supply M = 1040 %3D Price level = 2 (where Y,stands for disposable income, and i for rate of interest) Derive the IS and LM equations and fund out the equilibrium levels of income and rate of interest.

Consider an economy with the following features Consumption, C= 100 + 0.9 Y, Income tax, t=-Y 3. Investment, I= 600 – 30 i Government expenditure, G= 300 Transaction demand money for M, 0.4Y Speculative demand for money, M,=- 50 i Nominal money supply M = 1040 %3D Price level = 2 (where Y,stands for disposable income, and i for rate of interest) Derive the IS and LM equations and fund out the equilibrium levels of income and rate of interest.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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